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The Collaborative Clearinghouse for Lawsuits and Other Claims Against ACE Group Insurance Companies

WESTCHESTER FIRE INSURANCE COMPANY v. ZURICH AMERICAN INSURANCE COMPANY

ATTENTION: It is possible that this information may no longer be current and therefore may be inaccurate. The index contains both open and closed cases and is not a complete list of cases in which an ACE Insurance Group company is involved. This information is provided to give interested persons an idea of the issues disputed in the indexed cases. For a full understanding of a case, one should read the rest of the court file, including the response. For the most up-to-date and complete information on a case, visit www.pacer.gov or contact the clerk of the relevant court.

Case Number: 
1:13-cv-02207 Search Pacer
ACE Group party(s): 
Court Type: 
Federal
US District Court: 
Northern District of Illinois
Date Filed: 
Mar 22 2013

"COUNT I - NEGLIGENCE

42. Westchester realleges and incorporates by reference the allegations in paragraphs 1 to 41 of this Complaint.

43. Under Illinois law, Zurich had a duty to Paschen and to Westchester to act reasonably and in good faith in attempting to settle the Kelly Lawsuit within its limit of liability.

44. Zurich breached those duties by virtue of its conduct in controlling the defense and settlement of the Kelly Lawsuit, including but not limited to the following:
a. Zurich provided and controlled the defense of the Kelly Lawsuit against Paschen through Zurich’s Captive Firm without ever advising Paschen of its right to independent counsel in light of the potential excess limits exposure to Paschen.
b. Zurich exercised control of the settlement negotiations in the Kelly Lawsuit without regard to the excess policy limits exposure that existed against Paschen.
c. Zurich failed to keep Paschen and Westchester fully and appropriately advised of the settlement negotiations in the Kelly Lawsuit.
d. Zurich failed to respond to or accept settlement demands, including mediator’s proposals, in a correct and/or timely fashion.
e. Zurich failed to resolve the liabilities that existed against Paschen for within Zurich’s $1 million policy limit when it had clear opportunities to do so, and without appropriately explaining the ramifications of a failure to settle.
f. Zurich wrongly allowed the Kelly Lawsuit to proceed to trial against Paschen notwithstanding the excess exposure that course of conduct presented to Paschen, resulting in an excess limits verdict against Paschen.

45. Zurich had the opportunity to settle and resolve all of Paschen’s liabilities arising out of the Kelly Lawsuit within it limit of coverage.

46. Despite Zurich’s control of the defense and settlement negotiations in the Kelly Lawsuit, Zurich negligently failed to settle the Kelly Lawsuit within its limit of liability.

47. As a result of Zurich’s negligence, Westchester has expended significant amounts to indemnify Paschen for settlements and judgments arising out of the Kelly Lawsuit and to defend Paschen in its post-trial and appellate activities.
WHEREFORE, Westchester prays that this Honorable Court find that Zurich breached its duty to settle the Kelly Lawsuit within its primary limit of coverage and therefore Zurich is liable to reimburse Westchester for: amounts Westchester paid in satisfaction of settlement and judgments against Paschen in connection with the Kelly Lawsuit; amounts Westchester paid to defend Paschen in connection with the Kelly Lawsuit; pre- and post-judgment interest; attorneys’ fees; and any such further relief as this Honorable Court deems just and proper.

COUNT II – BREACH OF FIDUCIARY DUTY
48. Westchester realleges and incorporates by reference the allegations in paragraphs 1 to 47 of this Complaint.

49. Under Illinois law, Zurich owed a fiduciary duty of due care and good faith to Paschen, as its insured, and by extension to Westchester as Paschen’s excess insurer, with respect to the Kelly Lawsuit, including a fiduciary duty to settle the exposures arising out of the Kelly Lawsuit within Zurich’s policy limit.

50. Zurich breached the duties it owed to Paschen and Westchester in its conduct of the defense of the Kelly Lawsuit, including without limitation, the following:
a. Zurich provided and controlled the defense of the Kelly Lawsuit against Paschen through Zurich’s Captive Firm without ever advising Paschen of its right to independent counsel in light of the potential excess limits exposure to Paschen.
b. Zurich exercised control of the settlement negotiations in the Kelly Lawsuit without regard to the excess policy limits exposure that existed against Paschen.
c. Zurich failed to keep Paschen and Westchester fully and appropriately advised of the settlement negotiations in the Kelly Lawsuit.
d. Zurich failed to respond to or accept settlement demands, including mediator’s proposals, in a correct and/or timely fashion.
e. Zurich failed to resolve the liabilities that existed against Paschen for within Zurich’s $1 million policy limit when it had clear opportunities to do so, and without appropriately explaining the ramifications of a failure to settle.
f. Zurich wrongly allowed the Kelly Lawsuit to proceed to trial against Paschen notwithstanding the excess exposure that course of conduct presented to Paschen, resulting in an excess limits verdict against Paschen.

51. Zurich had the opportunity to settle and resolve all of Paschen’s liabilities arising out of the Kelly Lawsuit within it limit of coverage.

52. Despite Zurich’s control of the defense and settlement negotiations in the Kelly Lawsuit, Zurich failed to settle the Kelly Lawsuit within its limit of liability.

53. Zurich’s failure to settle the Kelly lawsuit within its limit of coverage constitutes a breach of the duty of due care and good faith it owed to Paschen and Westchester.

54. As a result of Zurich’s breach of the duty of due care and good faith, Westchester has expended significant amounts to indemnify Paschen for settlements and judgments arising out of the Kelly Lawsuit and to defend for Paschen in its post-trial and appellate activities.
WHEREFORE, Westchester prays that this Honorable Court find that Zurich breached its duty of due care and good faith by failing to settle the Kelly Lawsuit within its primary limit of coverage and that therefore Zurich is liable to reimburse Westchester for: amounts Westchester paid in satisfaction of settlement and judgments against Paschen in connection with the Kelly Lawsuit; amounts Westchester paid to defend Paschen in connection with the Kelly Lawsuit;
pre- and post-judgment interest; attorneys fees; and any such further relief as this Honorable Court deems just and proper."

The provided text is an excerpt from a document filed in this case. For a full understanding of the case, one should read the complete court file, including the response.

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